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Ordinance No. 9,291ORDINANCE NO. 9291 4r, AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS, AUTHORIZING AND DIRECTING THE CITY MANAGER AND THE CITY CLERK OF THE CITY OF BAYTOWN TO EXECUTE AND ATTEST TO A LEASE OF PREMISES AGREEMENT WITH RESTAURANTS U.S. ENTERPRISES, BAYTOWN LTD FOR OPERATION OF THE RESTAURANT FACILITY IN THE BAYLAND WATERFRONT DISTRICT; AND PROVIDING FOR THE EFFECTIVE DATE THEREOF. BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF BAYTOWN, TEXAS: Section 1: That the City Council of the City of Baytown, Texas, hereby authorizes and directs the City Manager and the City Clerk of the City of Baytown to execute and attest to a Lease of Premises agreement with Restaurants U.S. Enterprises, Baytown LTD for operation of the restaurant facility in the Bayland waterfront district. A copy of said agreement is attached hereto, marked Exhibit "A," and made a part hereof for all intents and purposes. Section 2: This ordinance shall take effect immediately from and after its passage by the City Council of the City of Baytown. INTRODUCED, READ and PASSED by the affirmative vote of the City Council of the City of Baytown this the 10th day of January, 2002. PETE C. ALFARO, Iftayor ATTEST: � D APPROVED AS TO FORM: NACIO RAMa]3 ., City Attorney FA kaneneWPocumentsl CounciNOi-02UanuarylLcaseo fl'remises4Restaurante B agandIslandWithRestaurantsUSdoc 0. LEASE OF PREMISES STATE OF TEXAS § COUNTY OF HARRIS § This Lease of Premises (this "Lease ") is signed on this day of January 2002, between The City of Baytown, Texas, a municipal corporation located in Harris and Chambers Counties, ( "Lessor ") and Restaurants U.S. Enterprises, Baytown LTD, having its principal place of business at 1913 Summer Reef, League City, Texas ( "Lessee "). WHEREAS, Lessor is the owner of that certain twelve (12) acre tract of land, more or less, in the City of Baytown, Texas, which tract is more particularly described on Exhibit "A," attached hereto and made part hereof for all purposes (the "Premises "); and WHEREAS, the parties acknowledge that Lessor has developed or caused to be developed on a portion of the Premises (the "Leased Premises ") a restaurant facility more particularly described in Exhibit `B," which is attached hereto and incorporated herein for all intents and purposes ( "Premises Improvements "). The Premises Improvements shall include all equipment, point of sale cash registers, audio and video equipment, permanent fixtures, permanent furniture and permanent decor items, which exist on the Premises on the effective date of this lease. The Premises Improvements shall also include a parking lot of at least fifty (50) spaces serving the Premises and the surrounding development, all parking lot lighting, sign pylons, sign monuments, walkways, utility extensions, sprinkler systems, and landscaping materials. ARTICLE I 1.01. Words of Leasing. For and inconsideration of the covenants made by Lessee herein, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Lessor has leased, demised and let and by these presents does lease, demise and let unto Lessee and Lessee by these presents does hereby lease and take from Lessor the Leased Premises TO HAVE AND TO HOLD the Leased Premises unto Lessee, its successors and assigns, for and during the Term as defined in Article 2 of this Lease. 1.02. Disclaimers. LESSOR EXPRESSLY DISCLAIMS ALL WARRANTIES OF ANY NATURE, KIND OR CHARACTER WHATSOEVER, EXPRESS OR IMPLIED, REGARDING THE PHYSICAL CONDITION OF THE PREMISES, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE AND LESSEE ACCEPTS SUCH PREMISES IN AN "AS IS" CONDITION, WITH ALL FAULTS. LESSEE, BY ITS ACCEPTANCE OF THIS LEASE EXPRESSLY WANES ANY RIGHT • OR CLAIM AGAINST LESSOR FOR DAMAGES, RESCISSION OR OTHER REMEDY AT 1 MIT A ® LAW OR IN EQUITY WITH RESPECT TO OR RESULTING FROM THE PHYSICAL CONDITION OF THE PREMISES AND THE IMPROVEMENTS, IF ANY THEREON, INCLUDING, WITHOUT LIMITATION, THE FACT THAT PORTIONS OF THE PREMISES MAY BE LOCATED WITHIN THE 100 YEAR FLOOD PLAIN AND THE FACT THAT THE PREMISES IMPROVEMENTS HAVE ALLEGED ARCHITECTURAL AND DESIGN DEFECTS. THE WAIVER AND EXCULPATION PROVIDED ABOVE SHALL BE BINDING ON ALL SUCCESSORS, SUBLESSEES AND ASSIGNS OF LESSEE AND ALL OPERATORS OF THE PREMISES. • ARTICLE 2. LEASE TERM 2.01. Term. Subject to the terms and conditions hereof, the term of this Lease is for a period of two (2) years (the "Term ") beginning on the Effective Date and shall expire at midnight on the day immediately preceding the second (2nd) anniversary of the Effective Date, unless sooner terminated or extended as provided for in this Lease. 2.02. Option Period. Provided Lessee has met all of the obligations of this lease, the Lessee is granted the right to extend the Term for an additional period of five (5) years. If the Lessee elects to extend the Term for the first additional period of five (5) years, the Lessee may also elect to extend the Term for a second additional period of five (5) years immediately following the first additional period. If the Lessee elects to extend the Term for the second additional period of five (5) years, the Lessee may also elect to extend the Term for a third additional period of five (5) years immediately following the second additional period. In each case, the option may be exercised by giving the Lessor written notice thereof at least one hundred eighty (180) days before the expiration of the applicable term. ARTICLE 3. RENTAL PAYMENTS 3.01. Rental Payment during the Term and any extensions. As rent during the Term of this Lease, Lessee agrees to pay Lessor rent in monthly payments as follows: I . January 10, 2002 $1.00 2. February 1, 2002 $1.00 3. March 1, 2002 $1.00 4. April 1, 2002 $2,000.00 5. May 1, 2002 $2,000.00 6. June 1, 2002 $5,000.00 7. July 1, 2002 $5,000.00 8. August 1, 2002 $5,000.00 9. September 1, 2002 and the first of each subsequent month through and including December 31, 2003 the monthly base rent shall be $14,000.00 per month. 2 • 10. January 1, 2004 and the first of each subsequent month throughout the term and any option terms monthly base rent shall be $16,000.00 per month. 11. Starting January 1, 2004, all rent shall be increased yearly by an applicable CPI adjustment. The first CPI adjustment shall be calculated based upon the base rent due on January 1, 2004, and increased by (i) the Consumer Price Index (Urban) of the twelve months prior to January 1, 2004, or (ii) 12.5 %, whichever is less. The base rent shall again be increased each year thereafter based upon the base rent due the then previous year increased by (i) the Consumer Price Index (Urban) of the twelve months prior or (ii) 12.5 %, whichever is less. The total CPI increase in any five (5) year option term shall not exceed 12.5 %. 12. Starting on September 1, 2002, as additional rent, Lessee shall pay Lessor 5% of gross sales above the natural break point of sales, which additional rent shall be paid monthly within 45 calendar days after the end of the month. Such additional rent shall be calculated as follows: Additional Rent = 5% x (Monthly Gross Sales — (Monthly Base Rent /.05)) If the above - referenced formula yields a negative product no additional rent shall be due. "Gross sales" as used in this section shall mean all amounts received from whatever source which are received in connection with the operation of the Premises Improvements subject to offsets only for refunds, credit card company fee charges, complimentary meals, employee meal discounts and sales tax. Lessee shall deliver to Lessor by the 15th of each month, a report in a format approved by the City Manager the gross sales of the previous month. Lessee must keep such reports and the supporting documentation therefore for at least 4 years. Lessor shall have the right at any time to audit any all of the books and records which in any way relate to gross sales or the calculation of additional rent to be paid to Lessor. Lessee shall make all of these records readily available for the examination within ten days of a request therefore. If any audit by Lessor shows a deficiency in the amount of additional rent paid to Lessor by more than one percent (1 %), then the cost of the audit shall be paid by Lessee. The additional rent due and the cost of the audit shall be paid within 10 days' written notice of such deficiency and the cost of the audit. 3.02. Mariner of Payment. All installments of rent shall be paid in lawful money of the United States to the Director of Finance of the City of Baytown or his designee at the City Hall of Baytown, Texas. 3.03. Prompt Payment of Rent. Lessee's right to possession and all of Lessor's obligations hereunder are expressly contingent on the prompt payment of rent, and the use of the Premises and Premises Improvements by Lessee is obtained only on the condition that rent is paid on time. Payment of rent shall be an independent covenant and all monies received by Lessor shall be applied first to non -rent obligations of Lessee and then to rent regardless of any notation on the check. At any time after Lessor's receipt of a check from Lessee for rent and such check is not honored by the drawing financial institution due to insufficient funds or is otherwise dishonored twice for any reason, Lessor may at any time thereafter, at Lessor's sole option, require that all rent and other sums 3 • due from Lessee hereunder be paid either by cashier's check or money order. Failure to pay any rent as and when required herein will not only be considered a breach of this Lease but also result in interest, as specified in Section 3.05, being charged on the delinquent rental payment commencing on the date the payment first becomes overdue. 3.04. Interest on Delinquent Payments. Delinquent rent installments shall bear interest. Interest shall be determined by the prime interest rate as promulgated by Southwest Bank of Texas or its assigns or twelve percent (12 %) per annum, whichever is greater. Such interest shall commence on the day after each such installment was due and continuing until the installment is paid. ARTICLE 4. UTILITIES AND TAXES 4.01. Personal Property Taxes. Lessee shall pay all personal property taxes, general and special assessments and other charges of every description levied on or assessed against all personal property located on the Premises herein leased falling due during the Term or any options period hereof. For all purposes of this Lease, any tax, assessment or charge imposed upon the improvements, whether classified as real property or personal property, shall be considered personalty taxes. Lessee shall make all such payments directly to the charging authority prior to any delinquency and before any fine, interest or penalty shall become due or be imposed by operation of law for their nonpayment. 4.02. Other Taxes. Lessee shall promptly pay all other taxes imposed or which may be hereinafter imposed by any governmental authority arising out of or in connection with the use and occupancy of the Premises and pay any such taxes prior to any delinquency and before any fine, interest or penalty shall become due or be imposed by operation of law for their nonpayment. 4.01 Lessee's Right to Contest Taxes Assessed. Lessee may contest the legal validity or amount of any taxes, assessments or charges for which Lessee is responsible under this Lease, and may institute such proceedings as are necessary and appropriate to contest their validity. If Lessee contests any tax, assessment or charge, Lessee may, unless otherwise required by law, withhold or defer only that portion of the payment, which is the subject of Lessee's contest, or pay under protest. Prior to the date any contested taxes, assessment, or charge shall become due, Lessee shall perfect its contest of any tax, assessment or charge and advise Lessor in writing that Lessee has contested the same and the grounds therefor. All such contests must be made in good faith and diligently pursued. 4.04. Utilities. Lessee shall be responsible for and pay when due all bills or invoices for water, sewer and electricity and other utilities used on the Premises from and after the Effective Date of the Lease and shall pay all sewer charges, and all other similar fees and charges associated with the operation and construction of the Project Improvements. Lessor agrees to make available at the boundary of the Premises, at Lessor's sole cost and expense, facilities deemed adequate as determined by Lessor in transmission size and capacity for the operation of the Project Improvements (as well as capacity therefor) with respect to water, sanitary sewer and electricity. All of such ® facilities shall be available for connection by Lessee at the boundaryof the Premises. Lessee shall not 4 • be responsible for any connection or tap fees associated with water or sewer services provided by the Lessor. • ARTICLE 5. USE AND OCCUPANCY 5.01. Purpose. Lessee shall not use the Premises for any disorderly or unlawful purpose. The Premises shall be used by Lessee for the purpose of operating a first- class, full - service restaurant with service of alcoholic beverages. Any additional use not expressly mentioned herein must be approved in writing by the City Manager prior to the commencement of such use. 5.02. Conformance to Law. Lessee shall not use the Premises for any unlawful purpose in violation of any valid and applicable law, regulation, or ordinance of the United States, the State of Texas, or the City of Baytown or other lawful authority having jurisdiction over the Premises, but rather shall conform to all such laws, regulations and ordinances. Lessee shall not cause, permit or suffer any waste, damages, or injury to, any portion of the Premises. Lessee shall not conduct on or use the Premises for sexually oriented commercial enterprises as such are currently or hereinafter regulated by the City of Baytown or any other entity having jurisdiction over such activities. 5.03. Lessor's Covenant of Title and Quiet Enioyment. Lessor covenants and warrants that Lessor has the full right and lawful authority to enter into this Lease for the full term hereof and that Lessor has good, valid and marketable title to the Premises. 5.04. Successors and Assigns. The covenants and agreements herein contained shall run with the Premises and Premises Improvements and shall be binding upon and inure to the benefit of the parties and their respective heirs, legal representatives, successors and assigns. 5.05. Parkin. Lessor agrees and warrants that Lessee and its agents, employees, customers, and invitees shall have the right, together with the other tenants of Bayland Island and their respective employees, invitees and customers and the general public, to use all of the parking areas for vehicle parking purposes only as depicted in Exhibit "D," which is attached hereto and incorporated herein for all intents and purposes. Lessee understands and agrees that throughout the Term of this Lease, and any option period hereof, the parking areas and the modes of ingress and egress may be changed from time to time at the sole option of the City Manager; however, the Lessor acknowledges that Lessor will do nothing to substantially decrease the number of parking spaces allotted for the restaurant enumerated hereinabove. 5.06. Hours of Business. Lessee shall continuously during the entire term of the Lease and each extension thereof conduct and carry on the operations of a first - class, full- service restaurant as above - described on the Leased Premises which is designated for such purpose and shall keep the Leased Premises open for business and cause Lessee's business to be conducted therein for at least seventy (70) hours per week, commencing on Sunday and ending on the subsequent Saturday. l:• ® However, the seventy (70) hour requirement contained herein shall not be enforced during the weeks in which Thanksgiving Day and Christmas Day fall. Furthermore, this provision shall not apply if the Leased Premises should be closed and the business of Lessee temporarily discontinued therein (1) on account of strikes, lockouts or similar causes beyond the control of Lessee or (ii) in connection with any renovation or alteration of the Leased Premises, which such renovation or alteration and the time allotted for the same has been previously approved in writing by the Lessor; provided, that such closure shall be only for the period of time necessary to complete the renovation or alteration. Lessee shall to the satisfaction of the Lessor maintain sufficient sales personnel to care for the patronage and to conduct said business in accordance with sound business practice. In the event of a breach by the Lessee of any of the conditions contained in this paragraph, the Lessor shall have, in addition to any and all remedies at law or in equity, the right at its sole option to collect not only the minimum monthly rent, which shall be deemed to be the largest monthly rental paid by the Lessee prior to the date of the breach, but additional rent at the rate of one - thirtieth (1 /30th) of such minimum monthly rent for each and every calendar day that the Lessee fails to conduct its business as herein provided. ARTICLE 6. MAINTENANCE, REPAIRS AND ALTERATIONS 6.01. By Lessor. Lessor, at its sole cost and expense, shall maintain and repair the foundation, the building structure, exterior walls, roof, exterior windows, exterior doors and exterior mounted HVAC units on the roof of the Premises. Lessor shall also maintain, at its sole cost and expense, the grounds and the landscaping materials adjacent to the Restaurant and throughout the Bayland Development, including the daily expenses associated with cleaning and maintenance of the parking lot as well as maintenance of parking lot lighting. At all times during the term of this Lease, Lessor shall make reasonable efforts to fix or repair any defect in the building, structure, exterior walls, roof, exterior windows and exterior doors of the Premises upon receipt of written notice from Lessee that such repairs are necessary. 6.02. By Lessee. Lessee agrees at its own cost and expense to maintain the interior of the Premises in good condition and repair, ordinary wear and tear excepted. All maintenance and repair work undertaken by Lessee shall be done in a workmanlike manner, leaving the Premises free of liens for labor and materials. In the event that alien is filed against the Premises :for work completed by a contractor or subcontractor, Lessee shall immediately use its best effort to remove such lien within ten (10) days after the lien is placed on the property. In the event that a lien remains on the property after the expiration of ten days, Lessee shall execute a bond for the sum of one hundred percent (100 %) of the total lien amount, in standard forms for this purpose, guaranteeing that such lien shall be released from the Lessor's property. Such bonds must be submitted to and approved by the Lessor in order for the Lessee to be in compliance with this provision. 6.03. Alterations. During the term of this lease, Lessee may, after obtaining prior written approval from the Lessor, at its own expense, make such alterations, repairs, and additions within the interior of the building on the Premises as may be permitted by laws and regulations in force at the 6 ® time, as long as such alternations, repairs, and additions do not structurally weaken the building or render the same unsafe. Lessee shall, at all times, hold Lessor harmless from the payment for any work performed by Lessee pursuant to the provisions of this paragraph. The cost of any changes which may be structural in character and not occasioned by alterations or additions made by the Lessee and which are ordered by a governmental authority after the building or improvements provided for under this lease are completed, shall be borne by the Lessee and shall increase the said annual rental. 6.04. Lessor's Approval of Plans. Lessor shall have the right of approval of all construction, rehabilitation, additions, and alterations of the Premises Improvements or other improvements on the Leased Premises prior to commencement of same. Lessor's approval of construction, additions, and alterations of buildings or other improvements on the Leased Premises shall be governed by the following provisions: a. Written Approval Required. No construction, rehabilitation, addition, and alteration of the Premises Improvements or other improvements on the Leased Premises shall be made, unless the plans and specifications have received the prior, written approval of Lessor, which shall not be unreasonably withheld. b. Submission of Plans. Lessee shall, at its own expense, engage a licensed architect and /or engineer to prepare plans and specifications for the construction, rehabilitation, addition or alteration of the Premises Improvements or other improvements on the Leased Premises. If Lessee wishes to construct any other buildings or improvements or make any additions or alterations to buildings or improvements, Lessee must submit three (3) copies of detailed working drawings, plans, and specifications for any such projects for Lessor's approval prior to commencement of the project. C. Approval by Lessor. Lessor shall, through its city manager, within thirty (30) days of receipt of plans from Lessee, review all plans submitted pursuant to Subsection (b) above and note in writing any required changes or corrections that must be made to the plans. Any required changes or corrections must be made and the plans resubmitted to Lessor within thirty (30) days. d. Exception to Lessor's Approval. The following items require submission of plans and specifications to but not written approval by Lessor: Such minor repairs and alterations as may be necessary to maintain existing structures and improvements in a useful state of repair and operation; or ii. Such changes and alterations as are required by an authorized public official having authority or jurisdiction over such buildings or improvements in order to comply with legal requirements. 7 ® 6.05. Effect of Approval. Lessor's approval does not constitute approval of the architectural or engineering design, and Lessor, by approving such plans and specifications, assumes no liability or responsibility for the architectural or engineering design or for any defect in any building or improvement constructed from the plans or specifications. Lessor's approval under this section does not constitute approval for purposes of zoning or building code compliance or permitting. Lessee shall be required to secure appropriate pen-nits and comply with all City of Baytown permitting procedures. 0 6.06. Protection of Lessor Against Cost or Claim. Lessee shall not permit to be foreclosed any mechanic's or matenalman's lien or other statutory lien against the Premises or improvements thereon for any reason, including, but not limited to, the work, labor, services, or materials supplied to or at the request of Lessee. In the event that a lien is filed against the Premises or Premises Improvements, Lessee shall immediately use its best effort to remove such lien within ten (10) days after the lien is placed on the property. In the event that a lien remains on the property after the expiration of ten (10) days, Lessee shall execute a bond for the sum of one hundred percent (100 %) of the total lien amount, in standard forms for this purpose, guaranteeing that such lien shall be released from the Lessor's property. Such bonds must be submitted to and approved by the Lessor in order for the Lessee to be in compliance with this provision. In no event shall Lessee have the right, authority or power to bind Lessor or any interest of Lessor in the Premises for any claim for labor or material or for any other charge or expense incurred in the construction, repair or alteration of the Project Improvements. 6.07. Ownership of Improvements. Except as otherwise provided herein in respect to Lessee's right to remove certain personal property (a listing of which is attached hereto as Exhibit "C "), all construction, rehabilitation, additions and alterations of the Project Improvements shall be considered part of the real property owned by Lessor and shall remain on the Premises and become the property of Lessor upon the expiration or termination of this Lease. All Project Improvements and other improvements on the Premises, excluding trade fixtures, furnishings, funiiture, and other personal property, at the expiration or termination of this Lease shall, without compensation to Lessee and without the necessity of executing additional documentation evidencing the conveyance, immediately become Lessor's property free and clear of all claims to or against them by Lessee or anyone claiming by, through or under Lessee. Notwithstanding the foregoing or any provision of this Lease to the contrary, Lessor shall not have the right to any trademark or logo of the restaurant facility. However, the Lessee shall have the obligation to remove from the Premises all property therein (including signs) containing or depicting such restaurant or entertainment operator's logo or trademark on or prior to the expiration or termination date of this Lease. All such property remaining on the Premises after the expiration or termination of this Lease shall be deemed abandoned and shall without the necessity of executing additional documentation evidencing the conveyance, immediately become Lessor's property free and clear of all claims to or against them by Lessee or anyone claiming by, through or under Lessee. 0 0 ARTICLE 7. INSURANCE • 7.01. Lessee's Insurance. From and after the Effective Date and throughout the Term of this Lease, Lessee will keep and maintain, or cause to be kept and maintained, in force and effect insurance against claims for injuries to or death or persons or damages to property which may arise out of or result from the construction, operation, repair, or maintenance of the Project Improvements and all activities associated therewith, whether such construction, operation, repair or maintenance be performed by Lessee, its agents, representatives, employees, subcontractors, assigns, or anyone directly or indirectly employed by any of them or by anyone for whose acts any of them may be liable. Lessee's insurance coverage shall be primary insurance with respect to Lessor, its officials, employees and agents. Any insurance or self - insurance maintained by Lessor, its officials, employees or agents shall be considered in excess of Lessee's insurance and shall not contribute to it. Further Lessee shall cause all subcontractors to furnish separate certificates and endorsements for each such person or entity. All coverages for subcontractors shall be subject to all of the requirements stated herein. 7.02. Policies and Minimum Limits. The following is a list of standard insurance policies along with their respective minimum coverage amounts required in this Lease: a. Commercial General Liability General Aggregate: $2,000,000 ➢ Per Occurrence: $1,000,000 ➢ Owners' and Contractors' Protective Liability: $1,000,000, during construction and all renovations thereafter of the Project Improvements. ➢ Products & Completed Operations Aggregate: $2,000,000 ➢ Personal & Advertising Injury: $1,000,000 ➢ Liquor Liability Endorsement (only required if alcoholic beverages are sold for consumption on or off the Premises) ➢ Coverage shall be at least as broad as ISO CG 00 01 10 93 No coverage shall be deleted from standard policy without notification of individual exclusions being attached for review and reasonable acceptance. b. Business Automobile Policy Combined Single Limits: $1,000,000 Coverage for "Any Auto" C. Real and Personal Property Limit: Not less than 80% of insurable value, on a replacement cost basis (exclusive of cost of excavation, foundations, footings below the surface of the ground and costs of underground flues, pipes and drains). This coverage shall include structure and contents. ➢ Special form basis to include perils of flood and wind. 9 ➢ "Actual replacement cost" shall be confirmed from time to time (but not more frequently than once in any twelve (12) calendar months) at the request of Lessor, by one of the insurers, by submitting Lessee's schedule of values, or, at the option of Lessee, by an appraiser, engineer, architect or contractor approved by the issuer of such insurance policy and paid by Lessee. Furtherniore, Lessor shall have the right, at its sole cost and expense, to employ its own appraiser, engineer, architect, and/or contractor to ascertain the actual replacement cost for purposes of this section; and Lessee hereby agrees to fully cooperate with Lessor and grant access to all Project Improvements upon request by Lessor. d. Workers' Compensation or equivalent private insurance ➢ Statutory Limits 9 Employer's Liability $500,000 9 Waiver of Subrogation required. ➢ Coverage for United States Longshoremen & Harbor Workers Act on an "if any" basis. C. Errors and Omissions 9 The policy shall name Lessor as an additional party. ➢ This coverage shall be required during any design, construction, or renovation of the Project Improvements. 9 Limit: $1,000,000 per claim and in the aggregate. ➢ For all architects, engineers, and/or design companies. 9 Claims -made form is acceptable. Coverage will be in force for three (3) years after construction of the Project Improvements are completed. 7.03. Additional Coverages. In the event that Lessee alters the activities or operations conducted on the Premises, the Lessor reserves the right to insist upon additional coverages with limits deemed appropriate by Lessor's risk manager, including, but not limited to the following coverages: Boiler And Machinery /Mechanical Equipment Coverages; ➢ Amusement Ride Liability; and ➢ Pollution Liability, 7.04. Requirements Applicable to all Policies. The following shall be applicable to all policies of insurance required herein: a. Insurance carrier must have an A.M. Best Rating of A: VI or better. b. Only insurance carriers licensed and admitted to do business in the State of 10 Texas will be accepted. 10 ® C. Liability policies must be on occurrence form. Errors and omissions maybe on a claims -made form. d. Each insurance policy shall be endorsed to state that coverage shall not be suspended, voided, canceled or reduced in coverage or in limits except after sixty (60) days' prior written notice by certified mail, return receipt requested, has been given to Lessor. e. Lessor and its officers and employees are to be added as Additional Insured to liability policies. £ Upon request, and without cost to Lessor, certified copies of all insurance policies and/or certificates of insurance shall be furnished to Lessor. g. Upon request, and without cost to Lessor, loss runs (claims listing) of any and/or all insurance coverage shall be furnished to Lessor. h. All insurance required herein shall be secured and maintained in a company or companies satisfactory to Lender and Lessor, and shall be carried in the name of Lessee. Lessee shall provide copies of insurance policies required hereunder to Lessor on or before the Effective Date. i. The amounts of all required insurance shall be reviewed by the City of Baytown's Risk Manager on the fifth (5`h) anniversary date of this Lease and each fifth (5`h) year thereafter and shall be increased, if necessary, so that the amount of such coverage is at all times generally equal to the limits described herein measured in year 2002 dollars. 7.05. Waiver of Subrogation, Lessee shall secure an appropriate clause in, or an endorsement upon, each policy of insurance required to be provided by it hereunder pursuant to which the respective insurance companies waive subrogation and rights of recovery or permit the insured to agree with the other party hereto to waive any claim it might have against such party. The waiver of subrogation or permission for waiver of any claim herein before referred to shall extend to the agent of each party hereto and their respective contractors and employees and, in the case of Lessee, shall also extend to all the persons occupying or using all or any part of the project Improvements from time to time. • • n ARTICLE S. INDEMNITY 8.01 Indemnity. LESSEE HEREBY AGREES TO INDEMNIFY, HOLD HARMLESS, PROTECT AND DEFEND LESSOR, ITS OFFICERS, AGENTS, AND EMPLOYEES (THE "LESSOR PARTIES ") FROM AND AGAINST ANY AND ALL CLAIMS, LOSSES, DAMAGES, CAUSES OF ACTION, SUITS AND LIABILITY OF EVERY KIND, INCLUDING ALL EXPENSES OF LITIGATION, COURT COSTS AND ATTORNEY'S FEES, FOR ANY INJURY TO OR DEATH OF ANY PERSON OR DAMAGE TO ANY PROPERTY INCURRED IN CONNECTION WITH ALL CLAIMS, INCLUDING ANY ACTION OR PROCEEDINGS BROUGHT, THEREON, ARISING FROM, AS A RESULT OF, OR IN ANY WAY RELATED TO LESSEE'S AND ITS SUBTENANTS', ASSIGNEES', OFFICERS', AGENTS', EMPLOYEES', CONTRACTORS', GUESTS', AND /OR INVITEES' (THE "LESSEE PARTIES ") USE OR OCCUPANCY OF THE PREMISES AND /OR PROJECT IMPROVEMENTS OR ANY OF THE ACTIVITIES OF ANY SUCH LESSEE PARTIES IN OR ON THE PREMISES, OR THE DESIGN OR CONSTRUCTION OF THE PROJECT IMPROVEMENTS, WHERE SUCH INJURIES, DEATH, OR DAMAGES ARE CAUSED BY THE JOINT NEGLIGENCE OF THE LESSOR PARTIES AND ANY OTHER PERSON OR ENTITY AND /OR BY THE JOINT OR SOLE NEGLIGENCE OF THE LESSEE PARTIES. IT IS THE EXPRESS INTENTION OF BOTH LESSOR AND LESSEE THAT THE INDEMNITY PROVIDED FOR IN THIS PARAGRAPH IS AN INDEMNITY BY LESSEE TO INDEMNIFY, HOLD HARMLESS, PROTECT, AND DEFEND THE LESSOR PARTIES FROM (I) THE CONSEQUENCES OF THE NEGLIGENCE OF THE LESSOR PARTIES, WHERE THAT NEGLIGENCE IS A CONCURRING CAUSE WITH THAT OF ANY OTHER PERSON OR ENTITYOF ANY SUCH INJURY, DEATH OR DAMAGE AND /OR (II) THE LESSEE PARTIES' SOLE AND /OR CONCURRENT NEGLIGENCE. FURTHERMORE, THE INDEMNITY PROVIDED FROM THIS PARAGRAPH SHALL HAVE NO APPLICATION TO ANY CLAIM, LOSS, DAMAGE, CAUSE OF ACTION, SUIT OR LIABILITY WHERE THE INJURY, DEATH OR DAMAGE RESULTS FROM THE SOLE NEGLIGENCE OF THE LESSOR. 12 ® 8.02 Counsel. IN THE EVENT THAT ANY ACTION OR PROCEEDING IS BROUGHT AGAINST THE LESSOR BY REASON OF ANY OF THE ABOVE, LESSEE FURTHER AGREES AND COVENANTS TO DEFEND THE ACTION OR PROCEEDING BY LEGAL COUNSEL ACCEPTABLE TO THE CITY. • 8.03. Termination of Indemnity. Notwithstanding anything to the contrary contained in this Lease Agreement, the indemnity provided in this section shall not terminate upon the termination or expiration of this Lease, but shall continue in full force and effect for a period of four years upon the termination or expiration of this Lease. ARTICLE 9. CASUALTY 9.01. Duty to Repair. Should the Project Improvements or any other improvements or fixtures on the Premises be totally or partially destroyed or damaged by fire, or any other casualty whatsoever during the Term or any option term, Lessee shall, subject to the rights of any Lender under a Mortgage, promptly repair, replace, restore, or reconstruct the same to the same or better condition which existed immediately prior to such casualty. However, in the event Lessor, in its sole discretion, determines that the improvements destroyed should not be reconstructed, then all insurance proceeds payable as a consequence of the casualty shall be payable to Lessor. Lessor shall not be liable for any damage or destruction to the property on the Premises owned by Lessee under the terms hereof or belonging to third parties, nor for the loss of any such property from the Premises by theft or otherwise. ARTICLE 10. CONDEMNATION 10.01. Definitions. The following definitions apply in construing provisions of this Lease relating to a taking of all or any part of the Leased Premises, Project Improvements or improvements constructed in connection with a redevelopment of the Leased Premises or any interest in them by eminent domain or inverse condemnation: a. Taking means any taking by eminent domain or by inverse condemnation or for any public or quasi - public use under any statute. The transfer of title may be either a transfer resulting from the recording of a final order in condemnation or a voluntary transfer or conveyance to the condemning authority or entity under threat of condemnation, in avoidance of an exercise of eminent domain. The taking shall be considered to take place on the day that Lessee is physically ousted of possession of the Leased Premises by the condemning authority. b. Total taking means the taking of the fee title to all the Leased Premises and the Premises Improvements on the Leased Premises. 13 ® C. Substantial taking means the taking of so much of the Leased Premises or Premises Improvements or both that the remaining Leased Premises would not be economically and feasibly usable by Lessee, or the Project Improvements would be other than reasonably efficient or economic for Lessee's use all as determined by Lessee in its reasonable, good faith j udgment. 10.02. Notice. The party receiving any notice of the kinds specified below shall within fifteen (15) days of the date on which the party receiving such notice is aware of the intended taking, give the other party notice of the receipt, contents and date of the notice received: a. Notice of intended taking. b. Service of any legal process relating to condemnation of the Leased Premises or Premises Improvements. C. Notice in connection with any proceedings or negotiations with respect to such condemnation. l d. Notice of intent or willingness to make or negotiate a private purchase, sale or transfer in lieu of condemnation. 10.03. Representative of Each Party. Lessor and Lessee shall each have the right to represent its respective interests in each proceeding or negotiation with respect to a taking or intended taking and to make full proof of its claims. Lessor and Lessee each agrees to execute and deliver to the other any instruments that may be required to effectuate or facilitate the provisions of this Lease relating to condemnation. 10.04. Total or Substantial Takin. . On a total taking, Lessee's obligation to pay rent, to occupy the Premises Improvements, and to operate a first -class restaurant facility therein shall terminate on the day of the total taking of the Premises and Project Improvements. If Lessee reasonably believes that the taking is substantial under the definition appearing herein, Lessee shall, by notice to Lessor given within ninety (90) days after Lessee first receives notice by any means of the intended taking, seek concurrence from Lessor in order to treat the taking as a substantial taking. If Lessee does not so notify Lessor, the taking shall be deemed a partial taking. This Lease shall end as of the date of the total taking, when title vests in a third party and all rentals and other payments due shall be paid up to that date. 10.05. Partial Taking. If any part of the Leased Premises shall be acquired or condemned as aforesaid and if the partial taking or condemnation shall render the Leased Premises in the Lessor's opinion unsuitable for the business of the Lessee, then the Term of this Lease shall end as of the date that title vests in such proceedings and rent shall be adjusted to the date of the termination. In the event of a partial taking or condemnation that is not extensive enough to render the Leased Premises ® in both Lessor's opinions unsuitable for the business of the Lessee, then Lessee shall promptly 14 restore the Leased Premises to a condition comparable to its condition at the time of such condemnation less the portion taken and, if the size of the Leased Premises has been reduced by the taking or condemnation, the rent shall be reduced proportionately. 10.06. Award for Total Taking. On a total taking, the award therefor shall be distributed and paid to Lessee and Lessor as their respective interests under this Lease may appear. The following matters shall be used in determining the respective interests of Lessor and Lessee: a. The interest of Lessor shall be based on the value of Lessor's interest in improvements and real property of the Leased Premises; and b. The interest of Lessee shall be based on the value of Lessee's leasehold interest in the Leased Premises, if expressly awarded. 10.07. Award for Partial Taking. In the event of a partial taking, Lessor shall be entitled to a portion of the award equal to the value of the improvements and real property in the Leased Premises and the fee simple title to the remaining portion of the Premises, and Lessee shall be entitled to its leasehold interest in the Project Improvements, if expressly awarded. In such event, this Lease shall remain in full force and effect covering the remaining portion of the Premises. After the partial taking, Lessee shall, subject to the rights of each Lender, promptly commence reconstruction of the improvements damaged by such partial taking to as near a condition as existed prior to such taking as is practicable and thereafter diligently prosecute the same to completion. Lessee understands and agrees that subject to the rights of the Lender, Lessee hereby commits to expend all amounts received by Lessee by reason of the partial taking on the Premises in order to return the Premises and Project Improvements to as near a condition as existed prior to such taking. Lessor understands and agrees that Lessee will not be required under this Lease to expend more than the actual amount received by reason of the partial taking. Should any reconstruction be necessary, Lessee must obtain Lessor's prior written approval of the plans for reconstruction, which approval shall not be unreasonably withheld. 10.08. Temporary Taking. On any taking of the temporary use of all or any part or parts of the Leased Premises or Premises Improvements or both for a period, or of any estate less than the fee, ending on or before the expiration date of the Term, neither the Term nor the rent shall be reduced or affected in any way, and Lessee shall be entitled to any award for the use or the leasehold estate taken. If any such taking is for a period extending beyond the expiration date of the Term, the taking shall be treated under the foregoing provisions for total, substantial and partial takings. ARTICLE 11. MORTGAGES AND ESTOPPEL CERTIFICATES 11.01. Lessee's Mortgages. Lessee shall not have the right to mortgage and encumber its leasehold estate, nor any of the items of personal property provided by or financed by Lessor, but shall have the right to mortgage and encumber personal property, fixtures, trade fixtures, special finish items unique to the restaurant's concept, equipment, furniture and merchandise located in or 15 • upon the Leased Premises, which has not been provided or financed by Lessor. In such event or events, Lessor hereby agrees for the benefit of such mortgagees or holders of indebtedness from time to time: A. Equipment Waivers. To sign any document waiving all rights of Lessor to such equipment or other items of personal property and providing that any such lender or lessor may remove such items from the Leased Premises in the event that Lessee defaults on its loan or lease agreements. B. Notices. That Lessor will give to any such mortgagee or holder of indebtedness simultaneously with service on Lessee a duplicate of any and all notices or demands given by Lessor to Lessee from time to time. Such notices shall be given in the manner and be subject to the provisions of Articles 10 and 13 of this Lease. C. Mortgagee's Liability. Except with respect to the period any such parties actually hold the leasehold estate created hereby, no liability for the payment of rental or the performance of any of the Lessee's covenants and agreements hereunder shall attach to or be imposed upon any mortgagee, trustee under any trust deed, or any holder of any indebtedness secured by any mortgage or security agreement upon such personal property, all such liability being hereby expressly waived by Lessor. 11.02 . Lessor's Right to Sell or Mortgage. Except as herein below provided, Lessor reserves the right to sell, assign, transfer or convey its interest in this Lease and the Leased Premises without prior consent of Lessee, and Lessor shall further have the right to encumber and mortgage the Leased Premises and assign rentals payable by Lessee to Lessor to any mortgagee or other secured party who obtains an interest in the land and buildings of which the Leased Premises are a part or upon any buildings hereafter placed upon land of which Leased Premises form apart; provided, however, that no such sale, assignment, transfer, conveyance or mortgage shall in any way diminish the rights of Lessee to use the Leased Premises as provided in this Lease, and any person or entity standing in the place of Lessor as a result of any such sale, assignment, transfer, conveyance, or mortgage shall assume the duties and obligations to Lessee as provided in this Lease as if such person or entity were Lessor herein. 11.03 Right_ of First Refusal. Lessor grants to Lessee a right of first refusal with respect to the described property, as follows: If Lessor desires to sell the property described above or any material part of it and receives from a third party a bona fide offer for its purchase, Lessor agrees to disclose the terms of that offer to Lessee, in writing, within ten (10) days following receipt of the offer. Lessee will have twenty -five (25) days after receiving notice of the terms of the offer within which to elect to purchase the entire property or the same material part of it on terms identical to those offered by the third party. The election must be made by written notice to Lessor, accompanied by a check for $10,000 payable to the order of Lessor, the amount to be applied to the purchase price. Within fifteen (15) days after the period for election, the parties 16 0 will enter into a formal contract of sale containing the provisions normally used in such contracts in Harris County, Texas, and expressly including all terns of the original bona fide offer made to Lessor, except as the parties may mutually agree. 11.04. Statement of Performance. Lessor agrees to furnish Lessee, and any of the Lessee's mortgagees, upon written request therefore, a statement wherein Lessor shall, under oath, acknowledge that as of the date of such statement, Lessee, to the best of the Lessor's knowledge, has performed and observed all of the covenants and conditions herein stated to be performed and observed by Lessee, and that to the best of the Lessor's knowledge as of said date the leasehold estate hereby created and granted to Lessee is free of all defaults hereunder (or if defaults exist, specifying the nature of the default); provided, however, Lessor shall not be required to furnish Lessee or any such sublessee or occupant with such statement more than once during any calendar quarter. Nothing contained herein or any statement subsequently issued hereby shall waive any of the Lessor's rights to enforce any of the provisions of this Lease against the Lessee. Lessee: ARTICLE 12. LEASE DEFAULTS 12.01. Defaults by Lessee. Lessor shall have the right to declare the Lease in default if (a) Fails to pay any installment of rent or make any other payment of money due under this lease within seventy -two (72) hours after written notice of the failure shall have been given to Lessee; or (b) Defaults in the performance of any other obligation imposed upon Lessee by this lease and does not cure the default within fifteen (15) days after written notice describing the default in reasonable detail shall have been given Lessee (or, if the Lessor in its sole discretion, determines that the default cannot reasonably be cured within the fifteen (15) day period, if Lessee does not commence curative work within the fifteen (15) day period and prosecute the work to completion with reasonable diligence); or (c) Institutes proceedings, whether voluntary or otherwise, under the provisions of the Federal Bankruptcy Act or any other federal or state law relating to bankruptcy or insolvency, then the Lessor may immediately without any notice terminate this Lease; or (d) Makes an assignment for the benefit of creditors, then Lessor may immediately and without notice terminate this Lease or exercise any other rights or remedies available as a matter of law. 12.02. Notice of Default. Unless otherwise stated in this Lease, if the Lessee commits a default, the Lessor shall give the Lessee a written notice specifying the default and the Lessee shall have the following periods of time to cure the default: 17 ® (a) In the case of a failure to pay rent or any other default consisting of the failure to pay money, the Lessee must remedy the default within seventy -two (72) hours from the receipt of the notice, provided that if: • (i) The Lessor is required to give the Lessee notice of nonpayment of rent three (3) times in any twelve -month period, and (ii) Each of the notices contains a reminder of the substance of this subpart 9.02(a), thereafter Lessor shall no longer be obligated to give Lessee notice of a default consisting of the nonpayment of rent and the Lessor may immediately terminate the Lease. (b) In all other cases with the exception of those cases hereinabove specified where the Lease is subject to immediate termination by the Lessor, the default must be cured within fifteen (15) days from the receipt of the notice or, if the default is not reasonably susceptible of being cured within the fifteen (15) day period, commence curative work within the fifteen (15) day period and prosecute it to completion with diligence. The determinations regarding whether the default is reasonably susceptible to being cured within the above - referenced time frame and whether the Lessee is commencing curative work with diligence shall be made at the reasonable discretion of the Lessor. 12.03. Lessor's Remedies. If any such default occurs and is not cured within the time allowed by Section 12.02, the Lessee understands and agrees that the Lessee shall become immediately liable for all amounts due or which would have become due under the term of the Lease or any extension thereof Furthermore, in the event of such default, the Lessor, in addition to all other rights and remedies provided by the laws of the state of Texas or equity or under this Leases to which Lessor may resort cumulatively or in the alternative, shall have the following options: (a) Immediately to re -enter and remove all persons and property from the Leased Premises with or without termination of the Lease. Such property may be removed and stored in a public warehouse or elsewhere at the cost of, and for the account of, Lessee, all without service of notice or resort to legal process and without being deemed guilty of trespass, or becoming liable for any loss or damage which maybe occasioned thereby. Such re- entering and removal of persons or property from the Leased Premises shall not be deemed to preclude Lessor from exercising any other options granted by this Lease, nor shall it relieve Lessee from the payment of any sum then due to Lessor or from any claim for damages previously accrued or then accruing against Lessee. Should this Lease be terminated in part based upon Lessee's default during Term of this Lease, Lessee shall not be entitled to any proration or rebate of any advance rental payments made. (b) To proceed for past due installments, reserving its rights to proceed later for the remaining installments and to exercise any other option granted by this Lease. • (c) Immediately to cancel this Lease and to proceed in any manner against the Lessee for past due installments. (d) To re -enter the Leased Premises and to re -let the Premises in the manner set forth below. (e) To avail itself of any rights under the laws of the State of Texas to evict Lessee and obtain occupancy of the Leased Premises and to recover any past due rent and damages until the Leased Premises shall have been released, all as more fully provided in Section 13.04 hereafter. 12.04. Re -enter Leased Premises. Should Lessor elect to re- enter, under any provision of this Lease, or should Lessor take possession pursuant to legal proceedings or pursuant to any notice provided for by law, the Lessor shall have the right and the ability to make such alterations and repairs as the Lessor determines is reasonably necessary in order to re -let the Leased Premises and may re -let the Leased Premises or any part thereof. This re- letting shall be for such rental and on such terms as Lessor may deem advisable, including a lease on a monthly basis or for a term extending beyond the term of this Lease. All payments received by Lessor from such re- letting for the unexpired term of this Lease shall be applied: first, to the payment of any costs and expenses of such re- letting, including attorney's fees and the cost of such alterations and repairs; second, to the payment of any indebtedness other than rent due from Lessee to Lessor; third, to the payment of the present value, at a discount rate of eight percent (8 %), of the rent due and unpaid hereunder. If such rentals received from the re- letting are insufficient to pay the amount owed by Lessee, then the deficiency shall be paid during that month by Lessee hereunder, to Lessor. Such deficiency shall be calculated and paid monthly in the manner provided above. Lessee may request and shall be granted access to Lessor's books and records in order to ascertain the status and accuracy of its account with Lessor. Notwithstanding any other provisions hereof, in making the repairs and alterations, re- letting the Leased Premises and exercising its other rights hereunder, the Lessor shall mitigate and minimize the damages suffered by the Lessor and the amounts that shall be due by Lessee hereunder. 12.05. Reservation of Rip-hts. Failure to strictly and promptly enforce the conditions set forth above shall not operate as a waiver of Lessor's rights. Lessor expressly reserves the right always to enforce prompt payment of rent and to treat the failure to pay rent in accordance with this Lease as a default, regardless of any indulgences or extensions previously granted. The waiver by Lessor or Lessee of any breach of this Lease shall not be deemed a waiver of any subsequent breach of the same nor shall any other term or condition of this Lease be deemed to have been waived by Lessor or Lessee unless such waiver is in writing and signed by Lessor or Lessee. 12.06. Declaration of Default by Lessor. Any and all defaults reasonably declared by the Lessor shall be final and binding upon the Lessee. If the Lessee receives a default notice but in good faith denies that it is in default (in whole or in part) the Lessee may prevent the Lessor from exercising the rights or remedies set forth in this Article 13 by taking the following steps: 19 • (a) The Lessee shall remedy that part of the default as to which there is no dispute within the time allowed by Section 13.02. ' (b) As to the disputed part of the default, the Lessee shall either: (1) Remedy the alleged default within the time allowed by Section 13.02 with full reservation of the Lessee's right to recover from the Lessor the amount paid and costs incurred by the lessee if it is ultimately determined that a default did not exist, or (ii) Furnish the Lessor within the time allowed by Section 13.02 with security approved by the Lessor as adequate in amount to cure the default if a default is ultimately determined to exist, provided that the Lessor may not withhold the approval unreasonably. The security shall consist of cash, obligations of the United States (or any agency thereof), or certificates of deposit issued by a national bank and shall be held by a national bank approved by the Lessor as agent or custodian for the parties. 12.07. In the case of a dispute as to the existence of a default, the Lessee may, in lieu of or in addition to its rights under Section 13.06, assert its right and defenses in any other manner permitted by law. 12.08. Payment on Default. If Lessor is compelled or elects to pay any sum of money or do any acts that require the payment of money by reason of the Lessee's failure or inability to perform any of the provisions of this Lease after passage of any notice and cure period provided under any other provisions of this Lease, Lessee shall, within ten (10) days of the demand therefor, reimburse Lessor for such reasonable, actual sums, and all such sums shall bear interest at the Default Rate (as defined below) from the date of expenditure until the date of such reimbursement. Other sums payable under this Lease that are not paid by Lessee when due shall bear interest at the same rate from and after the payment due date until the date Lessor receives payment thereof. The Default Rate as used herein shall be defined as the prime rate as determined by Southwest Bank of Texas or its assigns, or twelve percent (12 %) per annum, whichever is greater. ARTICLE 13. EXPIRATION; TERMINATION 13.01. Lessee's Duty to Surrender_ upon Expiration. At the expiration of the Term of this Lease, Lessee shall surrender to Lessor possession of the Leased Premises, together with all personalty located on that portion of the Leased Premises owned by Lessee and used in connection with operation of the Leased Premises, but specifically excluding Lessee's computers, maintenance equipment, furniture, furnishings, office equipment, signs and other indicia of its corporate or operating name, trade fixtures, and any fixtures and equipment which are leased from a third party or W ® that are subject to a purchase money security interest, all of which Lessee shall have the right to remove from that portion of the Leased Premises prior to the expiration of the Term of the Lease. Lessee shall leave the surrendered portion of the Leased Premises, including the improvements thereon, in a good condition subject to ordinary wear and tear as determined at the sole discretion of the City Manager, except as expressly provided to the contrary in other provisions of this Lease. Lessee shall be responsible for all damage to the improvements occasioned by such removal. All property that Lessee is required to surrender shall become Lessor's property at the expiration of the Lease. All property that Lessee is not required to surrender but that Lessee fails to remove after expiration of this Lease shall be deemed abandoned, and Lessor, at its election, have the right to take possession of such property. IF LESSEE FAILS TO SURRENDER ANY PORTION OF THE PREMISES AT THE EXPIRATION OF THE TERM OF THIS LEASE, LESSEE SHALL DEFEND AND INDEMNIFY IN ACCORDANCE WITH ARTICLE 8 LESSOR, ITS OFFICERS, AGENTS, AND EMPLOYEES, FROM ALL LIABILITY AND EXPENSE RESULTING FROM THE DELAY OR FAILURE TO SURRENDER INCLUDING, WITHOUT LIMITATION, CLAIMS MADE BY ANY SUCCEEDING LESSEE FOUNDED ON OR RESULTING FROM LESSEE'S FAILURE TO SURRENDER. 13.02. Lessee's Duty to Surrender upon Termination. At the termination of this Lease, Lessee shall surrender to Lessor possession of the Leased Premises. Within thirty (30) days of the termination, Lessee shall surrender to Lessor all personalty located on the Leased Premises owned by Lessor and used in connection with operation of the affected portion of the Leased Premises, but specifically excluding Lessee's computers, maintenance equipment, furniture, furnishings, office equipment, signs and other indicia of its corporate or operating name, trade fixtures, and any fixtures and equipment which are leased from a third party or that is subject to a purchase money security interest, all of which Lessee shall have the right to remove from the affected portion of the Leased Premises. Property owned by Lessee and subject to this exception is listed in attached Exhibit "C ". Lessee shall leave the surrendered Leased Premises, including the improvements, in a good condition subject to ordinary wear and tear as determined by the City Manager, except as expressly provided to the contrary in other provisions of this Lease. Lessee shall be responsible for all damage to the improvements occasioned by such removal. All property that Lessee is required to surrender shall become Lessor's property upon the termination. All property that Lessee is not required to surrender but that Lessee fails to remove within the thirty (30) day period shall be deemed abandoned, and Lessor, at its election, have the right to take possession of such property. 21 • IF LESSEE FAILS TO SURRENDER THE AFFECTED PORTION OF THE PREMISES AS REQUIRED HEREIN, LESSEE SHALL DEFEND AND INDEMNIFY IN ACCORDANCE WITH ARTICLE 8 LESSOR, ITS OFFICERS, AGENTS, AND EMPLOYEES, FROM ALL LIABILITY AND EXPENSE RESULTING FROM THE DELAY OR FAILURE TO SURRENDER INCLUDING, WITHOUT LIMITATION, CLAIMS MADE BY ANY SUCCEEDING LESSEE FOUNDED ON OR RESULTING FROM LESSEE'S FAILURE TO SURRENDER. 13.03. Holding Over upon Expiration. Upon the expiration of the Term of this Lease, the Lease shall terminate without further notice at expiration of the Term. Any holding over by Lessee after expiration shall not constitute a renewal or extension or give Lessee any rights in or to the Premises except as otherwise expressly provided in this Lease. If Lessee and Lessor are in good faith negotiations for an extension of the Lease or for a new lease, which negotiations shall in no event exceed sixty (60) days, Lessee shall pay, as liquidated damages, the then current fair market rental value of the Premises and the improvements thereon, as determined by the Lessor, calculated on a per diem basis, multiplied by two (2) for the period during which Lessee possesses the Leased Premises beyond the expiration hereof. Such amount is reasonable in the light of the anticipated or actual harm to Lessor caused by the Lessee's holding over, the difficulties of proof of loss, and the inconvenience of otherwise obtaining an adequate remedy. 13.04. Holding Over upon Termination. Any holding over by Lessee after termination of any portion of this Lease shall not constitute a renewal or extension or give Lessee any rights in or to the affected portion of the Leased Premises. Should Lessee hold over, Lessee shall pay, as liquidated damages, the then current fair market rental value of the affected portion of the Leased Premises and the improvements thereon, as determined by the Lessor, calculated on a per diem basis, multiplied by two (2) for the period during which Lessee possesses the affected portion of the Leased Premises beyond the termination hereof. Such amount is reasonable in the light of the anticipated or actual harm to Lessor caused by the Lessee's holding over, the difficulties of proof of loss, and the inconvenience of otherwise obtaining an adequate remedy. ARTICLE 14. REPRESENTATIONS AND WARRANTIES 14.01. Lessee's_ Representations and Warranties. Lessee represents and warrants that: a. As of the execution date of this Lease, Lessee is a Texas Limited Partnership organized and validly existing under the laws of the State of Texas and has the power and authority to carry on its business as presently conducted and as contemplated to be conducted on the Leased Premises by this Lease and to enter into and perform its 22 ® obligations under this Lease; and the execution, delivery and performance by Lessee of this Lease has been duly authorized by all necessary action. • b. As of the execution date of this Lease, the execution, delivery and performance of this Lease by Lessee will not violate Lessee's organizational documents. 14.02. Lessor's Representations and Warranties. Lessor represents and warrants that: a. Except as disclosed to Lessee in writing, as of the Effective Date of this Lease, Lessor is the record owner of the Leased Premises. b. As of the Effective Date of this Lease, Lessor has all power and has obtained all necessary consents, votes and approvals for the authority necessary to enter into and perform under this Lease. C. As of the Effective Date of this Lease, to the best of Lessor's knowledge, the Leased Premises has free access to and from public streets and roads; there is no known pending or threatened condemnation action pertaining to the Leased Premises; and no known pending or threatened action which would result in the termination of such access to and from public streets and roads. d. Lessor has not executed any lease covering the Leased Premises which has not been terminated or the term of which has not expired. ARTICLE 15. MISCELLANEOUS 15.01. Assignment and Subleasing. Lessee may not assign this Lease in whole or in part or sublet all or any part of the Leased Premises without the prior written consent of Lessor. Notwithstanding any assignment or sublease, Lessee shall remain dually liable on this Lease and shall not be released from performing any of the terms, covenants and conditions of this Lease. 15.02. Notices. All notices required or permitted to be given hereunder may be given by letter sent via registered or certified mail, return receipt requested, telegram, or any other form of wri tten communication and shall be deemed to be duly served and given for all purposes: (a) To Lessor when received at: City of Baytown Attn: City Manager P.O. Box 424 Baytown, Texas 77522 Fax: 420 -6586 23 0 0 (b) To Lessee when received at: Attention Berry Terrell Rest. U.S. Eat. Baytown P.O. Box 1188 Kemah 77565 281 -538 -0629 as the case may be. Notices to a mortgagee or a trustee or sublessee shall in like manner be mailed to its or their respective last known addresses. Any party may change the address for the giving of notices to it by giving due notice of the new address to the other parties, provided that the new address must be at a place in the United States where the mails and either mailgrams or telegrams or similar communications are regularly received. Notice given by mail shall be deemed given three (3) days after the date of the mailing of the same to the above - referenced address. 15.03. Entire Agreement. This Lease, including the exhibits hereto, contains all the agreements between the parties hereto with respect to the Leased Premises and may not be modified orally or in any other manner other than by an agreement in writing, signed by all the parties hereto or their respective successors in interest. 15.04. Gender and Name. Words of any gender used in this Lease shall be held to include any other gender, and words in the singular number shall be held to include the plural when the sense requires. 15.05. Headings. The headings as to contents or particular articles or sections herein are inserted only for convenience, and they are in no way to be construed as a part of this Lease or as a limitation on the scope of the particular sections to which they refer. 15.06. Consents. Wherever either the Lessee's or the Lessor's consent or approval is required or desired, such consent or approval shall not be unreasonably withheld. 15.07. Rent on Termination. Upon any termination of this Lease, all rent paid but not earned shall not be refunded. 15.08. Force Majeure. Neither Lessor not Lessee shall be deemed in violation of this Lease if it is prevented from performing any of the obligations hereunder by reasons of strikes, boycotts, labor disputes, embargoes, shortage of material, acts of God, acts of public enemy, acts of superior governmental authority, weather conditions, floods, riots, rebellion, sabotage, or any other circumstances for which it is not responsible or which is not in its control, and the time for performance shall be automatically extended by the period the party is prevented from performing its obligations hereunder. 24 ® 15.09. Effective Date of Lease. This Lease shall be effective as of the date the last party hereof has executed this Lease, and references herein as to the "date this lease is signed" and words of similar import, shall mean such date. • 15.10. Payment of Legal Nees. Any other provision of this Lease notwithstanding, upon issuance of a final judgment in a court of law, of competent jurisdiction, in an action in which the Court has ruled on a dispute between Lessor and Lessee, the party against whom the judgment has been rendered shall be responsible for payment of all court costs and the reasonable attorney's fees of the prevailing party. 15.11. Texas Law. The construction, interpretation and performance of this Agreement shall be governed by the laws of the State of Texas. 15.12. Venue. Both parties hereby irrevocably agree that any legal proceeding arising out of or in connection with this Agreement shall only be brought in the District Courts of Harris County, Texas, or in the United States District Court for the Southern District of Texas, Houston, Harris County, Division. 15.13. Liquidated Damages. Both the Lessee and the Lessor agree that time is of the essence in the payment of all monies due pursuant to this Lease and that the time allotted for each monthly payment described herein is reasonable times for the payment of each, taking into consideration all conditions, including but not limited to, the economic environment, restaurant industry and conditions prevailing in this locality. The Lessee and the Lessor understand and agree that a breach of this contract as to time of payment or time of renovation will cause damage to the Lessor and further agree that such damage cannot be accurately measured and that ascertainment will be difficult. Therefore, as part of the consideration for the awarding of this Lease, the parties agree that for each and every calendar day any payment due hereunder or any portion thereof remains delinquent as set forth in the Lease, the Lessor may charge and the Lessee shall pay as part of the monthly lease amount owed the sum of Two Hundred Dollars ($200) as minimum liquidated damages. However, the foregoing agreement as to liquidated damages constitutes only an agreement by the Lessor and the Lessee as to the minimum amount of damages which the Lessor will sustain in any event by reason of the Lessee's failure to make payments within specified time periods. Should the Lessor suffer damage over and above the minimum amount specified by reason of the Lessee's failure to timely pay in strict accordance with the Lease, the Lessor may recover such additional amount. The Lessor will have the right to recover such amount from the Lessee; all such remedies shall be cumulative and the Lessor shall not be required to elect any one nor deemed to have made an election by proceeding to enforce any one remedy. 15.14. Litter and Pollutants. Lessee hereby guarantees that no pollutant, effluent, liquid or solid waste material, litter, trash or garbage issued from the Leased Premises is allowed to collect in the waters or in the vicinity of the Premises. 25 ® 15.15. Fire System. The Lessee shall be responsible for ensuring that all fire fighting systems and equipment is regularly inspected and remains in the highest degree of readiness. n 15.16. Consent. The Lessor by this Agreement does not give consent to litigation and the Lessor hereby expressly revokes any consent to litigation that it may have granted by the terms of this Agreement, charter or applicable state law. 15.17. Severability. All parties agree that should any provision of this Agreement be determined to be invalid or unenforceable, such determination shall not affect any other term of this Agreement, which shall continue in full force and effect. 15.18. No Third Party Beneficiaries. This Agreement shall not bestow any rights upon any third party, but rather, shall bind and benefit Lessee and the Lessor only. 15.19. Authority to Enter Contract. Each party has the full power and authority to enter into and perform this Agreement, and the person signing this Agreement on behalf of each party has been properly authorized and empowered to enter into this Agreement. The persons executing this Agreement hereby represent that they have authorization to sign on behalf of their respective corporations. 15.20. No Partnership. Nothing herein contained shall be construed or held to make Lessor and Lessee partners in the conduct of any business. The relationship between the parties hereto is and shall at all time remain that of Lessor and Lessee. 15.21. Nonmerper of Fee and Leasehold Estates. Notwithstanding any other provision of this Lease to the contrary, if both Lessor's and Lessee's estates in the Premises or the improvements or both become vested in the same owner, this Lease shall nevertheless not be destroyed by application of the doctrine of merger or any contrary provision of this Lease construable as requiring merger except at the express written election of Lessor. 15.22. Right to Inspect Premises. The Lessor has the right to inspect the Leased Premises at all reasonable times during the period of this Agreement or any extension thereof to ensure compliance with the terms and conditions of this Agreement. 15.23. AmbiiZuities. In the event of any ambiguity in any of the terms of this Lease, it shall not be construed for or against any party hereto on the basis that such party did or did not author the same. 15.24. Non - Waiver. Failure of either party hereto to insist on the strict performance of any of the agreements contained herein or to exercise any rights or remedies accruing hereunder upon default or failure of performance shall not be considered a waiver of the right to insist on and to 26 ® enforce by an appropriate remedy, strict compliance with any other obligation hereunder to exercise any right or remedy occurring as a result of any future default or failure of performance. 15.25. ApTeement Read. The parties acknowledge that they have read, understand and intend to be bound by the terms and conditions of this Agreement. 15.26. Multiple Original. It is understood and agreed that this Agreement maybe executed in a number of identical counterparts each of which shall be deemed an original for all purposes. IN WITNESS WHEREOF, the parties hereto have executed this Lease as of the day and year opposite their signature, said Lease to be effective the first date set forth above. ATTEST: GARY W. SMITH, City Clerk APPROVED AS TO FORM: • LESSEE: Restaurants U.S. Enterprises, Baytown LTD Signature Barry G. lerrell, President, Restaurants U.S. Management, LLC General Partner LESSOR: CITY OF BAYTOWN, TEXAS MONTE MERCER, City Manager City of Baytown, Texas 27 lr �J u A/12a�v ACIO RAMIREZ, SR., ty Attorney STATE OF TEXAS COUNTY OF HARRIS Before me on this day personally appeared Barry Terrell, in his capacity as President, of Restaurants U.S. Management, LLC General Partner, on behalf of such Limited Partnership, known to me to be the person whose name is subscribed to the foregoing instrument and acknowledged to me that he executed the same for the purposes and consideration therein expressed. SUBSCRIBED AND SWORN before me this O day of 12002. PATTI MERRELL Notary Public in and for the State of Texas OC=mhsion Notary Public, State of Turns Eames Nor. 27, 2004 C \Documents and Settingslignacio ramirezlMy DocumentslBayland IslandlT -bone Tom's leaselRestaurantLeasefinaldoc W 0 d C v F. -i LESSEE'S PERSONAL PROPERTY TO BE PROVIDED BY LESSEE 0 EXHIBIT "C" s PARKING TO BE DETERMINED BY CITY MANAGER 0 EXHIBIT "D"